What Are Seller Concessions? How Sacramento Buyers Can Get the Seller to Cover Closing Costs
Seller concessions are closing costs the seller agrees to pay on your behalf — a credit applied at closing that lowers the cash you need to buy. In today's more balanced Sacramento market, they're a common negotiating tool: a seller might cover $10,000–$15,000 of your closing costs or fund a rate buydown to make the deal work. But every loan type caps how much a seller can chip in. Here's how concessions work, what the limits are, and how to ask without weakening your offer.
How a Concession Actually Works
A concession is a credit, not a discount off the price. Say you agree on a $550,000 home and ask for a $12,000 seller credit toward your closing costs. The contract price stays $550,000, and at closing the seller credits you $12,000 — so you bring $12,000 less to the table. The seller's bottom line is what they net after the credit, which is why concessions are really just another lever in the negotiation.
Concessions can only be applied to real, eligible costs — you can't pocket the difference as cash. And the credit can't exceed your actual closing costs. If you ask for $12,000 but your costs are $9,000, only $9,000 sticks.
What Concessions Can — and Can't — Pay For
Eligible
● Closing costs (title, escrow, lender fees, recording, and similar).
● Prepaid items — property taxes, homeowners insurance, and interest reserves.
● Discount points to permanently lower your rate.
● A temporary rate buydown (like a 2-1 buydown) — increasingly popular while rates sit in the mid-6s.
Not eligible
● Your down payment — concessions can never cover it.
● Cash back to you at closing.
● Anything above your actual, documented costs.
The Limits by Loan Type
This is the part that trips buyers up. Each loan program caps how much a seller (and other interested parties) can contribute. Get the number wrong and it can stall your loan in underwriting, so know your cap before you write the offer.
Loan type
Scenario
Max seller concession
Conventional
Less than 10% down (owner-occupied / 2nd home)
3% of price
Conventional
10%–24.99% down
6% of price
Conventional
25%+ down
9% of price
Conventional
Investment property (any down payment)
2% of price
FHA
Any down payment
6% of price
VA
Customary closing costs + discount points
No percentage cap
VA
Concessions (funding fee, prepaids, debt payoff)
Up to 4% of value
USDA
Any down payment
6% of price
Time-sensitive —
Concession caps above reflect current Fannie Mae/Freddie Mac, FHA, VA, and USDA guidelines (multi-source corroborated, mid-2026). These thresholds have been stable for years but should be reconfirmed each cycle.
Note the NAR settlement wrinkle: customary seller-paid buyer-agent commission generally does NOT count toward conventional IPC caps — confirm current guidance.
The cap applies to the lesser of the sale price or appraised value.
What That Looks Like in Sacramento Dollars
On a $550,000 home, the caps translate to real money — and real flexibility:
● Conventional, 5% down: up to 3% = $16,500 in seller-paid costs.
● FHA, 3.5% down: up to 6% = $33,000 (though limited to your actual costs).
● VA, $0 down: seller can pay all customary closing costs, plus up to 4% ($22,000) in concessions.
For most buyers, actual closing costs land well under those ceilings — so the cap is rarely the limiting factor. The negotiation is.
The Rate Buydown Angle
Here's a move worth knowing. Instead of a lower price, you can ask the seller to fund a 2-1 buydown — using their credit to temporarily lower your rate by 2% in year one and 1% in year two, before it settles at your locked rate. With rates in the mid-6s, that can meaningfully ease your first two years of payments. Dollar for dollar, a buydown often does more for your monthly budget than a modest price cut.
How to Ask Without Weakening Your Offer
A concession request is a negotiation, so frame it well:
● Lead with the seller's goal. They want to net a certain number and close cleanly. A slightly higher price with a concession can get them there while cutting your cash to close.
● Be specific. “We're requesting a $12,000 credit toward closing costs” reads far stronger than a vague ask.
● Mind the appraisal. If you bump the price to fund a big credit, the home still has to appraise. Keep the request grounded in reality.
● Read the market. In a balanced or slower Sacramento pocket, sellers are more open to concessions. On a hot listing with multiple offers, a heavy concession request can cost you the deal — so weigh it against your leverage.
Frequently Asked Questions
What are seller concessions in simple terms?
They're closing costs the seller agrees to pay for you, given as a credit at closing. You bring less cash to buy the home. The price on the contract usually stays the same — the seller just credits you money toward your costs.
How much can a seller contribute toward closing costs?
It depends on your loan. Conventional loans allow 3% to 9% based on your down payment (2% for investment properties), FHA and USDA allow up to 6%, and VA allows all customary closing costs plus up to 4% in concessions — all capped at your actual costs.
Can I use a seller concession for my down payment?
No. Concessions can cover closing costs, prepaids, discount points, and rate buydowns — but never your down payment, and you can't take any of it as cash back.
Do seller concessions hurt my offer?
They can if you're competing against multiple offers, because a large concession lowers the seller's net. In a balanced or slower market, sellers are often willing. The key is matching your request to your negotiating leverage.
Are seller concessions a good idea?
They're a smart tool when you have enough for a down payment but closing costs would stretch you thin. Used within the limits, they help you keep cash in reserve — or redirect a credit into a rate buydown for lower early payments.
Thinking about asking for seller concessions?
Get your loan-type cap, your real closing cost estimate, and a smart way to structure the ask — whether that's covering closing costs or funding a rate buydown — anywhere in Sacramento, Placer, El Dorado, or Yolo county.
Call or text (916) 794-0777 • thechriskennedyteam.com
The Chris Kennedy Team at Reliant Lending • NMLS #971546 • Equal Housing Opportunity. This article is for educational purposes only and is not a commitment to lend, financial, tax, or legal advice. Rates, program guidelines, and figures cited are current as of publication and subject to change. Serving Sacramento, Placer, El Dorado, and Yolo counties.